The Purchasing Managers’ Index (PMI) in Dubai reached its highest level in nine months this past October, reflecting a significant upturn in activity among non-oil producing businesses as the fourth quarter commenced, which contributed to an increase in the PMI to its strongest point since January.
The PMI from S&P Global recorded a score of 54.5, slightly above September’s reading of 54.2, indicating robust improvements in operational conditions overall.
Non-oil producing firms experienced a surge in new order inflows in October, which bolstered a sharp increase in production levels. Employment rates also rose for the seventh consecutive month.
Significant Improvement
According to the latest data from the PMI survey, private sector firms not involved in oil production in the UAE witnessed another significant improvement in business conditions during October.
The growth rate remained above mid-year trends, supported by a strong rise in new orders, which drove notable expansion in overall business activity.
Firms also welcomed a slowdown in the increase of input costs for the second consecutive month in October, helping to maintain relative stability in production prices.
The seasonally adjusted main PMI for the UAE fell from 54.2 in September to 53.8 in October. However, the index continued to be higher than in the previous four months.
The index remained above the neutral 50.0 mark, indicating improvements in the performance of non-oil businesses. The overall activity volume in the non-oil private sector rose significantly in October.
Many companies surveyed reported that improved sales and the launch of new projects encouraged expansion. The growth rate surpassed the historical average of the survey for the third consecutive month. Similarly, the volume of new orders rose sharply in October.
This marks the second consecutive month of recovering demand after the survey data in August indicated the weakest growth in over four years, although the growth rate slowed compared to September.
Overall, committee members noted that improved economic conditions and expanded marketing efforts contributed to an increase in customer numbers. New orders from foreign clients exhibited only modest growth.
Purchasing activity increased during the month, with firms reporting the largest rise in input purchases since June. This helped stabilize inventory levels, which had been declining throughout the third quarter.
While some companies pointed to rising supplier prices, increased transportation costs, and higher wages, only 4% reported cost increases. Consequently, the survey indicated only a slight change in average selling prices for the second month in a row.
David Owen, a senior economist at S&P Global, stated, “The PMI for the UAE continues to indicate steady growth in the non-oil private sector as we approach year-end.
The growth rate of new business has recovered well since its lowest point in August, supporting increases in production and purchasing activity.” He added, “Most companies still expect economic conditions to remain favorable, with incoming orders bolstering business activity.”